Self-Employed And With Lots Of Questions About Health Care

The health care exchanges may be open, but there's no question they're still kind of a mess.

"The rollout has been excruciatingly awful for way too many people," Health and Human Services Secretary Kathleen Sebelius conceded to the Senate Finance Committee last week.

But mess or not, the law is going forward, people are trying to use it, and they have questions. Here are some of yours, and our answers.

Fran Heyman of Westchester, N.Y., wants to know, "If you are self-employed, is there a cap to how much you can make to use the Affordable Care Act insurance?"

No. There's no upper limit to how much you can earn and still be able to buy health insurance on the exchange. But there is an upper limit on how much you can earn and qualify for a subsidy to help offset the costs. That upper limit is 400 percent of the federal poverty level — about $46,000 in modified adjusted gross income for an individual and about $94,000 for a family of four. If you earn less than those amounts, you can qualify a subsidy that will lower your premiums. Earn more than that, you'll have to pay full freight.

Barbara Lorell of Bremerton, Wash., has the opposite question — what happens if you earn too little? She's a self-employed pet sitter, and she says her income fluctuates a lot during the year. She wonders what happens if she signs up for a plan on the health exchange and gets federal subsidies to help pay her premiums, but then doesn't end up earning enough and should have been on Medicaid instead. Will she be expected to pay those subsidies back?

No, she won't. The way the law was written, it was expected that most people with low incomes would be enrolled in the Medicaid program. Because of that, if your income is under the poverty line — $11,490 for an individual this year — you're not eligible to buy coverage on the exchange. You could enroll in Medicaid instead, but only if your state is one of the 26 that are expanding the program. If not, you may fall into the gap where there is no program for you.

The catch, as Lorell points out, is that you have to estimate your income in advance. So you may overestimate your income, buy coverage and get subsidies, and then discover when tax time comes that you weren't actually eligible, after all, because you earned too little. Experts assure us that this possibility has been taken into account, and you won't be punished or thrown into jail or even asked to pay back the subsidies in those situations.

On the other hand, if you underestimate your income and get subsidies, then end up earning more, come tax time the following year you will be expected to pay back subsidies you weren't eligible for.

Staying with this theme of who can and can't use the exchanges, here's a question from Michell Wright of Atlanta. She wonders, "If your employer currently offers insurance, did you have to go with your employer's insurance, or were you actually able to select a plan outside of that?"

This is one of the most frequently asked questions about the health law. And the answer is, it depends. Pretty much anyone can drop employment-based insurance and buy a policy on the exchange instead. But in most cases you won't be eligible for a subsidy, no matter how low your income is.

That's because the members of Congress who wrote the law didn't want people rushing out of their employment-based plans to the exchanges and getting federal subsidies, which would have run up the law's price tag. So for most people it won't make a lot of economic sense to switch — most employers pay at least some, and usually a lot, of the cost of employee health insurance if they offer it.

But there are two situations where you can drop the health insurance you've been getting through your job, and get a subsidy on the exchanges. One is if for whatever reason your employer's insurance plan is on the skimpy side and doesn't pay at least 60 percent of typical health expenses for a covered group. The second is if your coverage — not your family's coverage, but your coverage — costs more than 9.5 percent of your family income.

Speaking of subsidies, Phil Smith from New Braunfels, Texas, has a subsidy question. He says he's read that the subsidies apply only to silver-level plans, and that if a person decides to purchase a lower-cost bronze plan, the subsidy cannot be applied.

That's actually not the case. But first let's back up a bit and explain what he's talking about. There are four different levels of coverage you can choose on the exchanges, and they're named for metals: bronze, silver, gold and platinum. Bronze plans have the lowest premiums but also the fewest benefits; platinum plans, the highest premiums and most generous benefits.

People under age 30 have another option; a basic plan that covers just preventive services and three primary care visits before deductibles are met. But the plan also covers care for a catastrophic illness or injury.

The confusion arises because the amount of subsidy someone gets is calculated based on the silver plan. But that subsidy can then be applied to any plan you want. For many people, that subsidy may be enough to get bronze-level coverage free.

But there's an exception to that, too. Some people will qualify for help with not just premium, but with deductibles and copays, too. That's for people with income under 2 1/2 times the poverty level, or about $23,000 for an individual. To get that extra help, you do have to buy a silver-level plan.

Jim Thomas, of Philadelphia, has a question about the law's tax penalty if people don't buy coverage. "If the person chooses to simply pay the tax and not purchase actual health insurance through the website or exchanges," he asks, "is ... [that] citizen covered for any health care expenses, such as private doctor visits or emergency room visits?"

That's easy: No. That person has chosen to remain uninsured. And therefore he or she is financially responsible for his or her own medical bills.

There is a separate federal law, called EMTALA, that requires hospitals to treat people who show up in emergency rooms. But those hospitals will send you a bill. In many cases people without insurance are also poor and can't pay those bills, and hospitals end up eating the cost. But hospitals work hard to collect what they can, so they will come after people they think might be able to pay.

Thomas also asked why people wouldn't just wait until they need the insurance to sign up. That's because in most cases you can sign up only during open enrollment periods. This first open enrollment period goes until the end of March 2014. After that, however, these open seasons will be a lot shorter, lasting only about six weeks each year.

Brian Gorman of Hoboken, N.J., has been looking at plans in his state, but he's finding a problem. "I realize that my health care plan here in New Jersey will restrict me to New Jersey doctors and be more expensive than if I were to buy a plan in New York. Is it possible for me to buy a New York state plan as a New Jersey resident?" he asks.

Not right now. At the moment you're required to sign up in the exchange for the state that matches your mailing address. There actually is a provision in the Affordable Care Act to allow something called health care choice compacts that would do exactly what Gorman is talking about. So far, seven states have passed legislation that could allow health insurance policies to be sold across state lines. But none of those states has taken the necessary steps to let this happen. So right now you have to stay in your home state.

But insurance plans can and do include doctors and hospitals in other states, particularly in areas located near a state border.

Finally, Ruth Ahrens of Lubec, Maine, asks a question relevant to everyone trying to use the balky HealthCare.gov website: "How are people obtaining the paper applications?"

There are several ways to get a paper application. One of them is actually from the much-maligned HealthCare.gov website. On the home page there are now four icons that have replaced the photo of the smiling lady no one was ever able to identify. One of those icons connects to the paper application. Operators at the HealthCare.gov call center (1-800-318-2596) can also provide paper applications, as can health care navigators or assisters. They are usually affiliated with local civic or health organizations such as community health centers or hospitals.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

LINDA WERTHEIMER, HOST:

This is MORNING EDITION from NPR News. I'm Linda Wertheimer.

DAVID GREENE, HOST:

And I'm David Greene, good morning.

Today in Your Health we're answering more of your questions about the Affordable Care Act. The state health insurance exchanges have now been open for six weeks. And it is not exactly news that things haven't gone very smoothly. Here's how Health and Human Services Secretary Kathleen Sebelius put it last week before a Senate Committee.

SECRETARY KATHLEEN SEBELIUS: The rollout has been excruciatingly awful for way too many people.

GREENE: OK, difficult rollout but the law is in place. People in the country are trying to get health insurance and they have many questions. We've seen some of the questions because you're sending them to us.

NPR's Julie Rovner is here again to answer some of them. Julie, good morning.

JULIE ROVNER, BYLINE: Good morning David.

GREENE: Well, let's get to it because we have a lot of questions this month, many of them not surprisingly having to do with the specifics of how these health insurance exchanges are supposed to work. This is one, from Fran Heyman, of Westchester, New York.

FRAN HEYMAN: I was just wondering, if you are self-employed if there is a cap to how much you can make to use the Affordable Care Act insurance?

GREENE: OK, Julie, this is interesting because we've had people ask about whether, you know, they might not earn enough to be able to shop on the exchanges. She seems to wonder if you can be excluded if you earn too much money.

ROVNER: In a word, no. There is no upper limit to how much you can earn and still be able to buy health insurance on the exchange, as long as you pay full retail for the premiums. There is an upper limit on how much you can earn and qualify for a subsidy to help offset the costs. That upper limit is 400 percent of poverty, which is about $46,000 for an individual and about $94,000 for a family of four. If you earn less than those amounts, you can qualify for help. More than that, you'll have to pay full freight.

GREENE: OK. So you only need to determine whether or not you qualify for the subsidies to help you pay for it.

Well, this question really interested me when I saw it. It comes from Barbara Lorell of Bremerton, Washington. She's a self-employed pet-sitter, and she says her income fluctuates a lot during the year. I imagine if she is pet-sitting for a lot of pets or fewer.

(LAUGHTER)

GREENE: And she wonders if she signs up for a plan on the health exchange, and gets federal subsidies to help pay the premiums, what happens if she doesn't end up earning enough and she should have been on Medicaid instead? Would she be expected to pay those subsidies back?

ROVNER: Again, the answer is no, she won't. We actually got a couple of iterations of this same question this month. Because of the way the law was written, it was expected that most people with low incomes would be enrolled in the Medicaid program. Because of that, if your income is under the poverty line; about $11,000 for an individual, you're actually not eligible to buy coverage on the exchange. You would need to enroll in Medicaid instead, assuming your state is one of the 26 that's expanding the program. If not, you may actually fall into a gap where there is no program for you.

The catch, as our letter writers point out, is that you have to estimate your income in advance. So you may overestimate your income, buy coverage and get subsidies, and then discover you weren't actually eligible when tax time comes around because you earned too little. I am assured that this possibility has been taken into account, and you won't be punished or even asked to pay back the subsidies in those situations.

On the other hand, I should add here that if you underestimate your income, and you get subsidies, and end up earning too much, you will be expected to pay back subsidies that you weren't eligible for come tax time the next year.

GREENE: OK, so worth doing the best estimates that you possibly can...

ROVNER: Absolutely.

GREENE: ...when it comes to income.

OK. Well, let's stay with this theme of who can and can't use the exchanges. Here's a question from Michell Wright from Atlanta, Georgia.

MICHELL WRIGHT: I was wondering whether or not if your employer currently offers insurance, did you have to go with your employer's insurance that they offered. Or were you actually able to select a plan outside of that?

GREENE: OK, Julie, can you buy a plan on an exchange even if you can get insurance from your work.

ROVNER: This is one of the most popular question that gets asked. And the answer is, it depends. Pretty much anyone can drop their employer insurance and buy a policy on the exchange instead. But in most cases you won't be eligible for any kind of subsidy, no matter how low your income is. That's because those who wrote the law didn't want people rushing out of their employer plans to the exchanges and getting federal subsidies; it would just cost too much.

GREENE: Right.

ROVNER: So for most people it won't make a lot of economic sense to switch because most employers pay at least some and usually a lot of the cost of your health insurance if they offer it. But there are two specific situations where if your employer offers health insurance, you can drop it and go to the exchange and qualify for a subsidy. That's if your employer insurance doesn't pay at least 60 percent of covered health expenses for a typical population - in other words, not very generous insurance.

Or if your coverage - not your family's coverage - but your coverage costs you more than 9.5 percent of your income. Otherwise, opting out of your employer's insurance means that you'll pay the full sticker price on the exchange.

GREENE: OK, few exceptions when you can go to the exchanges even if you're getting insurance from your employer.

Well, let's move to the subsidies that some people are eligible for. A question from Phil Smith from New Braunfels, Texas. He says he has read that the subsidies available can only be applied to silver-level plans, and that if a person decides to purchase a bronze plan, the subsidy cannot be applied.

And I guess we should start by you helping us explain these metals that we're talking about.

ROVNER: That's right. There's four different levels of plan that you can choose on the exchange, and they're named for metals, as you mentioned. The least generous plans are bronze, then moving up are silver, gold, and platinum. Bronze plans have the lowest premiums but also the fewest benefits, platinum plans have the highest premiums and the most generous benefits.

I think where Mr. Smith and some others have gotten confused is that the amount of subsidy someone is eligible for is based on the silver plan. But you can take that subsidy, whatever that specific amount is, and apply it to any plan you want. For many people, that subsidy actually may be enough to purchase a bronze level plan for zero premium.

There is one exception to that. There's always an exception.

GREENE: Always. Always.

ROVNER: Always. Some people will qualify for help with both premiums and deductibles and co-pays - those are people with income under two and a half times the poverty level. And to get that help, you do have to buy a silver level plan. Perhaps, that's what Mr. Smith is referring to.

GREENE: That might be what he had read. OK, here's an interesting question about the law's tax penalties, which a lot of people have been talking about. It comes from Jim Thomas from Philadelphia, Pennsylvania.

JIM THOMAS: If the person chooses to simply pay the tax, and not purchase actual health insurance through the website or exchanges; let's call that person the tax-only-paying citizen, is the tax-only-paying citizen covered for any health care expenses, such as private doctor visits or emergency room visits?

GREENE: OK. I think what he's asking you is if you have to pay a fine for not being covered, by paying that money to the federal government, does it get you some coverage somehow?

ROVNER: No, it doesn't. You have chosen to remain uninsured. Therefore, you are financially responsible for your own medical bills. Now there is a separate federal law that does require hospitals to see and stabilize people who show up in their emergency rooms. But those hospitals will send you a bill. In many cases, people without insurance are also poor and can't pay those bills, which is how hospitals end up eating the cost a lot of the time. But hospitals also work hard to collect what they can, so they will come after you if they think you can pay.

OK. And we have one final question I wanted to throw at you, Julie, from Brian Gorman of Hoboken, New Jersey. He's been looking at plans in his state, New Jersey, but he's finding a problem.

BRIAN GORMAN: I realize that my health care plan here in New Jersey will restrict me to New Jersey doctors and be more expensive than if I were to buy a plan in New York. Is it possible for me to buy a New York State plan as a New Jersey resident?

GREENE: Julie Rovner, can you live in one state and buy a policy in another?

ROVNER: Well, not right now you can't. At the moment, you're required to sign up in the exchange for the state that matches your mailing address. There actually is a provision in the Affordable Care Act that would do exactly what Mr. Gorman is talking about. So far, seven states have passed legislation that could allow health insurance policies to be sold across state lines. But none of those states have taken the necessary steps to let this happen in the exchanges yet. So right now you have to stay in your home state.

But I should add that insurance plans can include doctors and hospitals in other states, particularly in areas that are located near a state border.

GREENE: All right, good to know. Julie Rovner, always fun to do this. Thanks a lot.

ROVNER: Thank you.

GREENE: Let's do it again next month. And if you want to see some more questions and answers, you can go to our website, npr.org. And if you have a specific question you want to throw at Julie Rovner, you can send it to MORNING EDITION@npr.org.